Car Insurance 2024: Revealing the Driving Force Behind Skyrocketing Insurance Rates

But here’s something that hasn’t changed much: the pace at which car insurance rates are rising.

The rise in car insurance rates alone contributed half a percentage point to the overall 3.2% inflation rate last month.

Car insurance rates are up almost 21% for the 12 months ended in February, according to new Consumer Price Index data released Tuesday. The last time car insurance rates rose that much on an annual basis was 1976, not counting January, which saw the same annual rate increases.

That has led to an increase in claims that is well above historical averages because of their severity, according to LexisNexis Risk Solutions data. 

Their data indicates that insurers booked losses on 27% of collision claims in 2022. That’s three percentage points higher than 2021.

LexisNexis also attributes that rise to riskier driving behaviors such as speeding, texting behind the wheel and driving under the influence of either drugs or alcohol.

Beyond the repair costs associated with more severe car damage, they also “tend to lead to a higher share of claims with attorney representation, which usually ends up being more costly for insurers,” said Zawacki.

There’s a lot of variation from state to state regarding the car insurance rate increases that drivers are facing. 

That’s partially because auto insurers price their plans based on the losses they’re incurring on a state-by-state basis, Robert Passmore, vice president for personal lines at American Property Casualty Insurance Association. 

Nevada drivers saw the highest jump — an increase of 38% — in car insurance rates across all states besides Wyoming from January 2023 to February of this year. 

Meanwhile, drivers in North Carolina saw the smallest bump in car insurance rates, up just 5.5% over that same timeframe. 

That’s partially due to the state’s unique format that includes a rate bureau that submits filings on behalf of the entire industry. That bureau settled on a 4.5% average statewide increase for 2023 and another 4.5% increase in 2024.

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